Disabled People and the Supply Side Business Case

humanITy Paper

Date: 01/12/2006

1. Introduction

There has been a great deal of discussion in the accessibility literature over the past decade of the "business case" for the providers of ICT goods and service to supply disabled people with what they need. This article:

Discusses the supply side claim
Separates the different options
Explores the boundary between free market and public sector operations; and
Draws some constructive conclusions.

2. The Supply Side Claim

The supply side claim made on behalf of disabled people, particularly by a public sector reluctant to regulate or legislate, is that the demographic trend which shows an increasing number of people living ever longer, a substantial sub-set of which is disabled, provides a business case for suppliers. A generally accepted figure of 10% of the EU population is designated as disabled for the purposes of this business case and it is correctly noted that while many of these people have incomes below the average, many are in receipt of substantial state and/or private pensions.

The statement which follows from this analysis is that the size of the potential market indicates a business opportunity, particularly if nation state suppliers consider the EU market as a whole.

In making this case, two examples of good practice are quoted:

The British Telecom Big Button telephone

and

The supermarket retailer TESCO accessible on-line shopping web site.

It is significant that these two examples are cited repetitively and that they are the only two that are well known.

3. Different Options

The supply of ICT goods and services is almost entirely based on a short product cycle, anything from 18-72 months depending on the manufacturing processes. In spite of near monopolies in such sectors as operating systems and applications, competition in both ICT hardware and software is intense. Many corporations endure cycles with two phases: a rapid growth phase to product marketing followed by a down-sizing phase.

Central to ICT goods and services provision is the concept of opportunity cost. Corporations, faced with a variety of demands, assess those likely to provide the largest return on capital. In the area of mobile telephones, for example, a new model for the 15-25 market is likely to produce greater revenue than a model for the 65-75 market. The cost of the unit might be approximately the same for both markets (although the unit for the older market is likely to be more expensive as it will contain more physical material and require more packaging) but the margin in the 15-25 market will be higher than the 65-75 market because the former is accustomed to operating under severe peer pressure in a constantly upgrading environment.

The business case for disabled people can only work if the figures for the opportunity cost are superior to those for other markets. Further, designers and marketing teams may well decide that supplying the 15-25 market, all other factors being equal (including the opportunity cost for other market segments), fits best with the company brand and image.

The following scenario is based on notional figures as there is no specific product in mind but they make the point clearly enough:

		Standard	Disabled
i.	Potential size of market	90%	10%
ii.	Penetration	20%	10%
iii.	Economies of scale	20%	1%
iv.	Margin	10%	5%.
v.	Brand	+ 5%	-5%

Notes:

The nation to bloc argument does not hold. If a company has the marketing and supply chain resources to extend its operations from one country to the whole EU, the proportionate opportunity cost remains constant (9:1) but the absolute number of potential consumers widens with every new country.
Penetration of the different market segments varies and is likely to be lower in a slow uptake market like that for 65-75.
It will take much longer to sell an identical number of devices to the 65-75 than to the 15-25 segment; this means shorter manufacturing runs or greater storage costs. The figure cited may be somewhat high as it is based on the multiplication of the top two figures in each column.
Margin is a function of disposable income per product sector. Even in the highly competitive 15-25 and hardly competitive 65-75 market segments the difference of margin is significant.
Brand affects future sales.

In this context the two examples most cited are not very helpful as both emerged from companies with market leadership in their sector, fighting to increase market share in mature markets.

BT lost its monopoly in 1984 but continued both to retain a public service ethos and to command an overwhelming penetration in land line telephones.
TESCO, significantly, was in fierce competition for market share in a maturing supermarket retail environment but its accessibility initiative arose directly from a legal challenge under the UK Disability Discrimination Act (DDA 1995) [1] by the Royal National Institute of the Blind (RNIB). Its accessible site was therefore constructed in 2001 in order to head off further legal action.

There is an important distinction to be made between operating in a competitive cyclical market and in a mature market. Further, there is also a difference between operating in a mature market and a mature niche market.

To illustrate these points, let us look at the market for set top boxes for digital television. At some point in the near future this market will become cyclical as competitors develop ever more attractive offers with low cost high satisfaction features in addition to access to digital television but, in the short term, the major objective is to supply 100% of the market in seven years. This means that the market looks like a mature market because of the penetration rate. At this point margins become crucial as competitors drive down the cost of units. They are, in effect, fighting for that part of the market which can most easily be accommodated. However, at approximately 80% of penetration the market becomes cyclical with 20% left behind as presenting a lower opportunity cost than the 80% who will purchase an upgrade.

The solution for the 20% is to consider it to be a niche market, similar to that in the disability world for hoists, special beds etc. These niche companies, however, with their high R&D and small market segments rely heavily on public sector programmes (NHS, DWP) for their funding.

There is no business case without public sector funding for special set top boxes for disabled people. There is no guaranteed UK market because of EU competition law which in turn prevents any party receiving a guarantee of market share in exchange for a reasonable supply price.

A further complication to the nation-to-bloc strategy in this case is the lack of a common standard across EU television.

The only viable solution so far is that a monopoly intermediary (the BBC) puts a set of generic user requirements for an accessible box out to open tender with a guaranteed market segment and a guaranteed public sector subsidy.

4. Private and Public Sector

This is a useful point for the introduction of the concept of universal design or design for all. Both of these ideas are, strictly speaking, rhetorical. No mass produced article is going to be suitable for all users; so the objective, realistically, is design for almost all.

Because of the legal framework in the UK of "reasonable adjustment" and because of the realities of supply, the concept that really matters is optimal design: the inclusion of accessibility features in any product or service until such point as the cost of additional features outweighs the market benefit, i.e. the cost of supply and the volume of demand (and margin) become out of balance.

Here are some examples of optimal design:

The tiny dot on the 5 of a numeric keypad or on the f and j of a qwerty keyboard involve a microscopic alteration to standard tooling
Constructing door frames in new houses to accommodate wheelchairs involves a tiny cost at most compared with the total cost of a house and is probably dictated by building regulations
Providing a facility for adjustable print and font on a web site is a tiny part of an initial design cost compared with the potential increase in end users.

Optimal design criteria change over time; the voice out capacity that would have been expensive on 1993 PC's will cost next to nothing today (which makes it difficult to understand why telephones do not have standard voice-out on dial mode and menus).

Examples of non-optimal design are:

A braille display attached to every public terminal
A type talk facility on every telephone
British Sign Language on all television output
Wheelchair lifts in all houses.

There is an implicit boundary between optimal design and public sector, special, niche responsibility, i.e. that which exceeds reasonable adjustment should not be financed by the private sector but should be financed by the public sector in the context of civil rights and citizenship. This idea is understood to the extent that the public sector is bent on widening the optimal design remit. This makes good economic sense for the public sector because the more functions that are accommodated in optimal design the fewer the citizens who need to be served by special niche provision. However, problems arise when the boundary is ideological and not design-based so that a 'business case’ is based on a theory of supply and demand rather than on cost and market and the ratio of the two in terms of opportunity cost rather than cost in isolation. A model which ignores opportunity cost assumes unlimited capital. If the public sector thinks the business case is so good but that business is ignoring opportunities, it should use public funds to provide the goods and services required by disabled people and remit the profits to H.M Treasury.

5. Solutions

As a general principle, there should be an ascending degree of control which is triggered by lower level failure as follows:

The market operating on an optimal basis with a public sector commitment to fund the non-optimal.

In this are we have not been very creative. Here are some innovate models:

a) Cost Sharing. The public sector should fund the difference between the maximum opportunity cost of an investment and the cost of providing a product or service that meets its public policy; this should be considered as an alternative to the total cost funding of either sector

b) As a sub-set of (a) above, the public sector might finance the enhancement of optimal design characteristics where these are no longer seen as 'reasonable adjustment' by the commercial sector; a case in point would be remote controller design (although there are difficult competition issues).

If the market fails in spite of these kinds of measures, regulation may be required to ensure a degree of accessibility. The benefit of regulation is that it can be much more problem focused than general legislation. As long as it imposes a framework which provides a level playing field for competitors it will probably be acceptable. In spite of industry opposition, there is general recognition that businesses operate in a democratic environment with a citizen financed infrastructure and so regulation cannot simply be a settlement between industry and regulators. The best example of regulatory success is broadcasting.

Finally, there are cases where legislation is required if these other increasingly dirigiste options fail. The most obvious form of legislation would be a generic (platform independent), non discriminatory, contestable right to information:

Generic because contesting accessibility for every new platform is wasteful for consumers and producers and because a generic right would influence initial product design which, in turn, would re-define optimal;
Non discriminatory because in essence the lack of ICT access should not be a matter that is part of an EU Member state 'horse trading' exercise but should be regarded specifically as discriminatory;
Contestable because there should be an opportunity for individual producers and rights holders to indicate that what is required of them is unreasonable, i.e. this will determine the concept of optimal;
A right because to be properly contestable with, say, the Copyright Directive, it needs to be enshrined in a Directive of equal force.

This structure of ascending dirigism is elegant but perhaps unrealistic. It may well be that market, public sector and regulatory functions will not fit effectively together until they are within the framework of a generic right.

6. Culture

There are three cultural issues which need to be briefly addressed as they relate to the business case:

First, making the issues concrete
Secondly, cross-sectoral knowledge-sharing
Thirdly, efficient mechanisms for problem-solving.

Making the issues concrete. Accessibility, benchmarked or otherwise, is an abstract concept. Instead of trying to measure accessibility we should focus on task completion. The business case is better understood and either accepted or rejected if the focus is on specific goods and services such as retail, banking, libraries, tourism, health.
Cross Sectoral Knowledge-Sharing. Both the public and third sectors experience severe knowledge deficits in the area of ICT and public policy. Industry and the public sector should be prepared to fund a Diploma on ICT and Public Policy which offers subsidised places to not-for-profit organisations representing those with accessibility deficits.
Efficient Mechanisms for Problem-Solving. With respect to the first point, theoretical strategies need to be complemented by concrete problem-solving. Industry, academia, the public sector and, above all, excluded citizens, should be convened as problem-solving task forces to address highly specific problems.

[1] United Kingdom Parliament: Disability Discrimination Act 1995, HMSO, London, 1995 http://www.hmso.gov.uk/acts/acts1995/1995050.htm

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